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Book part
Publication date: 23 August 2021

Mohammad Nurunnabi

The study aims at reviewing a synthesis of disclosure, transparency, and International Financial Reporting Standards (IFRS) implementation in an attempt to provide…

Abstract

The study aims at reviewing a synthesis of disclosure, transparency, and International Financial Reporting Standards (IFRS) implementation in an attempt to provide directions for future research. Prior research overwhelmingly supports that the IFRS adoption or effective implementation of IFRS will enhance high-quality financial reporting, transparency, enhance the country’s investment environment, and foreign direct investment (FDI) (Dayanandan, Donker, Ivanof, & Karahan, 2016; Gláserová, 2013; Muniandy & Ali, 2012). However, some researchers provide conflicting evidence that developing countries implementing IFRS are probably not going to encounter higher FDI inflows (Gheorghe, 2009; Lasmin, 2012). It has also been argued that the IFRS adoption decreases the management earnings in countries with high levels of financial disclosure. In general, the study indicates that the adoption of IFRS has improved the financial reporting quality. The common law countries have strong rules to protect investors, strict legal enforcement, and high levels of transparency of financial information. From the extensive structured review of literature using the Scopus database tool, the study reviewed 105 articles, and in particular, the topic-related 94 articles were analysed. All 94 articles were retrieved from a range of 59 journals. Most of the articles (77 of 94) were published 2010–2018. The top five journals based on the citations are Journal of Accounting Research (187 citations), Abacus (125 citations), European Accounting Review (107 citations), Journal of Accounting and Economics (78 citations), and Accounting and Business Research (66 citations). The most-cited authors are Daske, Hail, Leuz, and Verdi (2013); Daske and Gebhardt (2006); and Brüggemann, Hitz, and Sellhorn (2013). Surprisingly, 65 of 94 articles did not utilise the theory. In particular, four theories have been used frequently: agency theory (15), economic theory (5), signalling theory (2), and accounting theory (2). The study calls for future research on the theoretical implications and policy-related research on disclosure and transparency which may inform the local and international standard setters.

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International Financial Reporting Standards Implementation: A Global Experience
Type: Book
ISBN: 978-1-80117-440-4

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Article
Publication date: 14 May 2018

David Mutua Mathuva and H. Gin Chong

This paper aims to utilize institutional theory to examine the impact of the 2008-2010 regulatory reforms on compliance with mandatory disclosures by savings and credit…

Abstract

Purpose

This paper aims to utilize institutional theory to examine the impact of the 2008-2010 regulatory reforms on compliance with mandatory disclosures by savings and credit co-operatives (SACCOs) in Kenya.

Design/methodology/approach

Two-stage least squares panel regression approach is utilized to analyse data covering 1,272 firm-year observations for 212 SACCOs over a six-year period, 2008-2013. An analysis of the pre- and post-regulation impacts on compliance with mandatory disclosure requirements is also performed.

Findings

The results, which are in support of the institutional theory, reveal that licensed SACCOs engage in higher compliance with mandatory disclosures, and this improves from the pre- to the post-regulation period. The results show that SACCOs under inquiry engage in lower compliance with mandatory disclosure requirements, especially in the post-regulation period. The findings also reveal a significant and positive association between SACCO size, co-operative governance and compliance with mandatory disclosure requirements.

Research limitations/implications

The study focuses on transition-level SACCOs in a single country. An extension into other jurisdictions with nascent, transitional and mature SACCOs would provide greater insights into the impact of disclosure regulation. Further, the study uses a self-constructed disclosure checklist which is subject to coding errors and biases.

Practical implications

The findings highlight the need for SACCO regulators and accounting professional body to devise incentives to improve the level of compliance with required disclosures.

Originality/value

The study contributes to the dearth of evidence on the efficacy of the introduction of mandatory disclosure requirements in a developing country where compliance is problematic because of difficulties with enforcement.

Details

Journal of Financial Regulation and Compliance, vol. 26 no. 2
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 6 May 2014

Ioannis Tsalavoutas and Dionysia Dionysiou

The purpose of this paper is to address recent calls for research regarding the valuation implications of mandatory disclosure requirements (cf. Hassan et al., 2009; Leuz…

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Abstract

Purpose

The purpose of this paper is to address recent calls for research regarding the valuation implications of mandatory disclosure requirements (cf. Hassan et al., 2009; Leuz and Wysocki, 2008; Schipper, 2007).

Design/methodology/approach

The paper measures compliance with all International Financial Reporting Standards (IFRS) mandatory disclosure requirements for a sample of firms. The paper subsequently explores whether the compliance scores (i.e. the mandatory disclosure levels) are value relevant and whether the value relevance of accounting numbers differs across high- and low-compliance/disclosure companies.

Findings

The paper finds that the levels of mandatory disclosures are value relevant. Additionally, not only the relative value relevance (i.e. R2) but also the valuation coefficient of net income of high-compliance companies is significantly higher than that of low-compliance companies.

Research limitations/implications

This paper is an indicative single country case study that focuses on the IFRS adoption year (2005) in the EU. It forms a new avenue for research regarding the valuation implications of mandatory disclosure requirements. It remains to future research to examine whether the findings also hold in other countries and periods.

Practical implications

These findings are expected to be particularly relevant to standard setters and regulatory bodies that are concerned about the implications of mandatory disclosure requirements (Schipper, 2007).

Originality/value

To the best of authors’ knowledge, this is the first paper that examines the value relevance implications of IFRS mandatory disclosure requirements, focusing on European country after 2005. The authors indicate that IFRS mandatory disclosures do lead to more transparent financial statements (cf. Pownall and Schipper, 1999), mitigating concerns about companies’ fundamentals (cf. Anctil et al., 2004).

Details

Journal of Applied Accounting Research, vol. 15 no. 1
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 9 May 2016

Mishari M. Alfraih

The purpose of this paper is to investigate the relationship between the characteristics of the board of directors and mandatory disclosure compliance (measured by…

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Abstract

Purpose

The purpose of this paper is to investigate the relationship between the characteristics of the board of directors and mandatory disclosure compliance (measured by International Financial Reporting Standards requirements) in firms listed on the Kuwait Stock Exchange (KSE) in 2010.

Design/methodology/approach

Several characteristics are used to assess the effectiveness of the board of directors: number of members, gender diversity, CEO duality, multiple directorships, the proportion of family members on the board and the presence of a member of the ruling family of Kuwait. Mandatory disclosure compliance is measured using a self-constructed, item-based index. A regression model tested the paper’s hypotheses.

Findings

After controlling for firm-specific characteristics, it was found that board size, gender diversity and multiple directorships were positively correlated with compliance, while CEO duality and the proportion of family members on the board were negatively correlated with compliance.

Research limitations/implications

Potential limitations stem from both the nature of the sample and the dataset. The small sample reflects the size of the KSE and the limited timeframe (a one-year period). Nevertheless, this paper provides some interesting insights. A longitudinal study would provide more comprehensive insights into the relationship between the characteristics of the board of directors and mandatory disclosure compliance over time.

Practical implications

The findings highlight the effectiveness of board of directors’ characteristics in promoting mandatory accounting compliance. As disclosure is fundamental for the effective functioning of capital markets and sound investments, a direct implication is that the quality of financial reporting can be improved by taking these characteristics into account.

Originality/value

The paper contributes to the literature on the determinants of mandatory accounting compliance. The findings highlight the importance of the board of directors’ role in enhancing transparency and ensuring the quality of financial reporting. The findings will be particularly valuable to those involved in the appointment of directors, who should be aware of the influence of the configuration and characteristics of the board on compliance.

Details

Journal of Financial Regulation and Compliance, vol. 24 no. 2
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 23 July 2020

Saoussen Boujelben and Sameh Kobbi-Fakhfakh

The purpose of this study is to explore the degree of compliance of a sample of European Union (EU) listed groups with the International Financial Reporting Standard 15…

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Abstract

Purpose

The purpose of this study is to explore the degree of compliance of a sample of European Union (EU) listed groups with the International Financial Reporting Standard 15 (IFRS 15) mandatory disclosures in two specific sectors, namely, telecommunication and construction.

Design/methodology/approach

To carry out this research, the authors selected 22 annual reports for the year 2018. The authors created and completed a datasheet based on a close review of the IFRS 15 disclosure requirements. A content analysis of the selected annual reports was then performed.

Findings

The results show that the sampled groups do not fully comply with the IFRS 15 mandatory disclosures and the degree of compliance differs between the two investigated sectors.

Originality/value

To the best of the authors’ knowledge, this study explores, for the first-time, the degree of compliance with the IFRS 15 mandatory disclosures, by focusing on a cross-country sample of EU listed groups.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 4
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 31 May 2005

Stephen Owusu‐Ansah

This paper investigates factors that influence the extent of corporate mandatory disclosure practices in New Zealand over a three‐year period. Researcher‐created disclosure

Abstract

This paper investigates factors that influence the extent of corporate mandatory disclosure practices in New Zealand over a three‐year period. Researcher‐created disclosure‐scoring templates consisting of mandated information items from three regulatory sources were used to derive indexes of disclosure in financial annual reports of the sample companies. Regression analysis suggests that company age is the most critical factor in explaining the extent of mandatory disclosure practices of the companies. The results also indicate that company size, liquidity, profitability, existence of audit committee, and auditor‐type are consistently positively related to the extent of corporate mandatory disclosure. Further research opportunities are suggested.

Details

International Journal of Commerce and Management, vol. 15 no. 2
Type: Research Article
ISSN: 1056-9219

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Article
Publication date: 4 July 2016

Kingsley Opoku Appiah, Dadson Awunyo-Vitor, Kwame Mireku and Christian Ahiagbah

This study aims to examine the association between five firm-specific characteristics and the level of compliance with International Financial Reporting Standards (IFRS…

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1402

Abstract

Purpose

This study aims to examine the association between five firm-specific characteristics and the level of compliance with International Financial Reporting Standards (IFRS) by companies listed on Ghana Stock Exchange. The five firm-specific characteristics are firm size, profitability, leverage, auditor type and firm age.

Design/methodology/approach

The study uses dataset from 31 listed Ghanaian firms from 2008 to 2012. Random effect is used to examine the influence of the predictive variables on the level of IFRS corporate compliance.

Findings

The result reveals a positive significant relationship between the level of compliance and firm size, auditor type, cross-listing and sector (information and communications technology (ICT) and agro-forestry). On the contrary, the level of compliance exhibits a negative significant association with leverage and firm age. It is observed that the level of compliance is not related to profitability. The results are robust to different model specifications.

Practical implications

This study identifies firm-specific characteristics that influence IFRS compliance by listed firms in Ghana. This would aid accounting policy makers to institute strategies to encourage compliance with IFRS by the listed firms.

Originality/value

The study contributes to financial reporting literature relating to developing economies and Ghana, in particular.

Details

Journal of Financial Reporting and Accounting, vol. 14 no. 1
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 13 February 2017

Azhar Abdul Rahman and Mohd Diah Hamdan

The purpose of this paper is to investigate Malaysian companies’ compliance with mandatory accounting standards. Specifically, this study examines the efficacy of…

Abstract

Purpose

The purpose of this paper is to investigate Malaysian companies’ compliance with mandatory accounting standards. Specifically, this study examines the efficacy of agency-related mechanisms on the degree of compliance with Financial Reporting Standards (FRS) 101, Presentation of Financial Statements. It so proceeds by focussing on corporate governance parameters (board characteristics and ownership structure) and other firm characteristics.

Design/methodology/approach

Using data drawn from a sample of 105 Malaysian companies listed on the ACE market in 2009, the authors employ multiple regression analysis models to establish whether selected corporate governance and company-specific characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance.

Findings

The results indicate that the overall disclosure compliance is high (92.5 per cent). Furthermore, only firm size is positively associated with the degree of compliance. The other variables, those consisting of board independence, audit committee independence, CEO duality, the extent of outside blockholders’ ownership and leverage, do not show any significant relationship with the degree of compliance.

Research limitations/implications

This study focusses on only one accounting standard (FRS 101) that is mandatory in Malaysia. FRS 101 is both structured and rigid, leaving no room for companies to conceal any particular information. The sample of Malaysian companies selected is restricted to those listed only on the ACE market. As such, the results cannot be generalised to every company in Malaysia.

Practical implications

These results have important implications for policy makers because they suggest that whilst agency-related mechanisms may motivate compliance with mandatory standards, full compliance may be unattainable without regulations.

Originality/value

This is the only study in Malaysia to investigate the impact of regulatory requirements on corporate compliance level by companies listed on the new ACE market, which was introduced by the Bursa Malaysia in August 2009. This study contributes to the literature by examining the effects of both company-specific characteristics (such as company size, company age, liquidity, etc.) and corporate governance parameters on the degree of corporate compliance with mandatory disclosure, simultaneously, in contrast with prior studies which have examined them in isolation.

Details

Journal of Applied Accounting Research, vol. 18 no. 1
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 23 November 2010

Ioannis Tsalavoutas, Lisa Evans and Mike Smith

The purpose of this research is to highlight the differences, and implications of any differences, between two approaches to measuring compliance with International…

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2581

Abstract

Purpose

The purpose of this research is to highlight the differences, and implications of any differences, between two approaches to measuring compliance with International Financial Reporting Standards (IFRS) mandatory disclosure requirements: the commonly used “dichotomous” approach; and the alternative, but rarely used, partial compliance unweighted approach. The former gives equal weight to the individual items required to be disclosed by all standards. The latter assumes that each standard is of equal importance and consequently gives equal weight to each standard.

Design/methodology/approach

The paper employs both methods on a sample of companies. We then compare the results deriving from the application of the two methods and statistically test their differences.

Findings

It is found that the two methods produce significantly different overall and relative (i.e. ranking order) compliance scores.

Practical implications

This paper should alert researchers to the implications of using either method. Additionally, it highlights the need for academics and/or practitioners to be cautious when interpreting the findings of prior studies on compliance with IFRS mandatory disclosure requirements. Since the two methods produce significantly different compliance scores, findings regarding the variables associated with compliance may differ, depending on the disclosure index method followed. The paper suggests that simultaneous application of both methods would result in more robust findings in future research.

Originality/value

This is the first study to compare the results produced by applying both methods and statistically test their differences. The research methods explored are in particular relevant for policy‐oriented, international accounting research.

Details

Journal of Applied Accounting Research, vol. 11 no. 3
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 28 June 2013

Musa Kribat, Bruce Burton and Louise Crawford

The paper aims to investigate disclosure practices in the annual reports of Libyan banks in the run‐up to the opening of the nation's first stock exchange. Banks dominate…

Abstract

Purpose

The paper aims to investigate disclosure practices in the annual reports of Libyan banks in the run‐up to the opening of the nation's first stock exchange. Banks dominate this embryonic market but very little research has examined the extent (or determinants) of transparency achieved by these firms, an issue argued by Stiglitz and others to be crucial in the post‐crisis era. Currently, no detailed evidence of disclosure practices prior to the launch of the exchange exists, making an accurate assessment of the market's impact in this area impossible; the present study therefore contributes in this regard as well.

Design/methodology/approach

The study employs two main methods: a disclosure index‐based analysis of mandatory and overall disclosure levels; and panel regression analysis of the determinants of the overall disclosure levels.

Findings

The results suggest that while many items are disclosed on a regular basis, on average barely more than half of all possible items appear in the annual reports. As regards compliance with mandatory requirements, the figures are higher but, worryingly, begin to fall as the launch of the market neared. The results of panel‐data analysis suggest that the overall extent of disclosure is non‐random, instead reflecting the profits achieved by the banks concerned.

Originality/value

This paper is the first detailed analysis of disclosure practices in Libyan banks and the results suggest that market authorities should be looking for an improvement in the figures, in particular the reversal of a downward trend in compliance with mandatory requirements. The paper reports a link between profit level and disclosure propensity; this evidence might be of use to regulators charged with increasing disclosure levels in the future. More generally, the results provide a comparative basis on which to assess the effect of the market's launch on disclosure practices in Libya.

Details

Journal of Accounting in Emerging Economies, vol. 3 no. 2
Type: Research Article
ISSN: 2042-1168

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